BANKING: Around 100,000 Amex holders in Cyprus must switch loyalty

07 November, 2018

The Bank of Cyprus (BoC) says it has stopped issuing new American Express cards to its 100,000 holders while all current cards are valid until March 31, 2019.

The decision follows US-based company effectively pulling out of Europe after changes to the EU’s banking regulations, while analysts hint that pressure from alternative payment methods may have played its own role in Amex’s decision.

A BoC source told the Financial Mirror that the EU has decided on changes regarding regulations of the banking system, which no longer allows Amex’s model of exclusive cooperation with one bank in each country.

Furthermore, the EU has decided to introduce a ceiling of 5% on charges applied for the use of any credit card but Amex fees are nearer 8% for Cyprus.

So, American Express decided to abandon the model on which it was operating in Europe whereby it was granting exclusive cooperation to only one bank in each country. In Cyprus, this was Bank of Cyprus

All existing American Express cards issued by BoC will be cancelled at the end of March.

All 100,000 BoC clients that are holders of American Express cards will be given new Mastercard or Visa cards.

“Those who have cards connected also to a Visa card, as Amex is not accepted in all parts of the world, will receive a Visa card. The rest are to receive a Mastercard,” the BoC source said.

He said that the bank would inform its customers during November and the new cards will be sent by mid-February.

“Amex holders will be able to use their cards until the end of March 2019. Two reward schemes offered by BoC for users of American Express cards – the cash back and supermarket scheme – will be cancelled at the end of the year.”

Amex will continue issuing its cards in large European countries directly to interested individuals, as it will no longer be cooperating with any banks.

The source said that acceptance of payment with American Express cards issued directly by the company is expected to continue, while the transition to new cards should run smoothly.

He added that current holders of American Express cards should not be concerned over the switch and that the new cards will not be more expensive.

“Although the bank has yet to conclude on the type of schemes it will be replacing the Amex, we will definitely be incorporating Mastercard benefits into them. The card is one of the official sponsors of the Champions’ League and we will certainly be looking into ways of taking advantage of this,” said the source.

He said that the American Express decision does not come as a shock nor does it leave the bank exposed. Amex had announced in the past that it would be discontinuing all of its bank licensing partnerships within the European Union due to regulatory developments in the EU.

Talking to the Financial Mirror, a banking analyst said that it may appear that Amex is leaving the continent entirely.

Amex is to leave most European countries but will maintain a physical presence in large countries such as France.

In terms of costs, Amex will not be able to compete with Visa and Mastercard through cooperation with banks. That is why it will address consumers directly in the few countries it will remain in.

It seems Amex will lose some of its prestige and with it, a significant part of the market share, said the banking analyst.

“Meanwhile, these institutions have also to deal with competition from alternative banking institutions or payment platforms which give users the possibility of carrying out transactions without the need of an intermediary such as banks,” he added.